Australia’s franchised new car Dealers peak body has supported the Federal Government’s decision to introduce significant reforms to Australian credit laws that will allow more individuals and businesses to access credit.

Through the reforms, the Government will make it easier for consumers to obtain credit in a more timely, cost-effective manner while reducing red tape and safeguarding consumer protections.

With a long COVID-19 recovery ahead, the Government believed it was crucial that access to credit was available to all Australian consumers and any unnecessary barriers were removed.

The move has been welcomed by the Australian Automotive Dealers Association (AADA), with CEO James Voortman saying he was optimistic that the changes would allow more consumers to access credit to purchase a new car while keeping them safe from overspending.

“These reforms are sensible and strike a good balance between freeing up credit and protecting consumers,” said Voortman.

“Under these changes, access to credit for consumers looking to buy a car will be less onerous and application timeframes will be more responsive.”

New car sales have witnessed a steady decline over the two and a half years, with the industry pointing to overly strict lending regulations making credit inaccessible for many consumers as a key factor for the decline.

However, Voortman was hopeful that the easing of regulations would encourage consumers to return to lending and bring them back to dealerships.

“There is no doubt that the overly strict application of the responsible lending obligations has contributed to new car sales falling for 29 consecutive months. We hope today’s announcement will breathe some life into our industry.

The reforms are scheduled to come into effect from 1 April 2021.

To read more about the Federal Government’s consumer credit reforms, visit the Treasury website.

7 October 2020